SARACEN Fund Managers has moved into profit as its two funds swelled in value and the firm spent more on staff and marketing.

The Edinburgh-based firm, whose funds are now worth £65 million, is aiming for further growth in the hope of attracting institutional investors that tend to park their money in larger funds.

Saracen posted a pre-tax profit of £15,501 for the year to the end of March, compared to a loss before tax of £60,202 in the prior year and £130,000 of losses in 2012.

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Its revenues, made chiefly from management fees, jumped from £380,421 to £548,137 according to documents recently filed at Companies House.

The group said in its accounts that it has been "working hard to re-connect with shareholders" who have been hunting for income in larger funds, rather than investing for growth in recent years.

"The growth fund has outperformed in 12 of the last 15 years. What we are finding is that there are a lot of funds in this area, and what we need to do a bit better is know our target investors , talk to investors, as the fund is very strong," said chief executive Graham Campbell.

"The thing about Saracen is the majority of the staff's savings are in the fund, so we have a long-term tie to our investors."

Saracen Growth Fund achieved a total return of 34.7 per cent in 2013, compared to a 20.8 per cent rise in the FTSE All-Share Index, which it uses as a benchmark.

The £29m fund holds shares in UK-listed companies including STV, Weir Group, Howden Joinery and MJ Gleeson.

In the group's Global Income and Growth Fund, which is approaching its third anniversary, inflows accelerated to take its total funds under management to £37m. It holds stocks from around the world including Novartis, Kellogg's and Aviva.

"Providing performance continues to remain supportive, the other major constraints of fund size and length of performance track record will diminish in importance," the company said.

Mr Campbell said Saracen plans to continue expanding and investing in its two existing funds for the next few years.

"We are still growing funds under management and still hiring people and spending on sales and marketing," he said.

Saracen hired Scott McKenzie, the former Martin Currie and Aviva Investors UK equity manager, as a new investment director earlier this month.

The firm also brought in David Keir from Scottish Widows Investment Partnership (SWIP) as its head of research last year.

The company conducts its own research into potential investment targets, with a view to putting money into firms that are under-researched by rivals.

Saracen invests with a long-term view, turniong over less than a fifth of its holdings a year since its foundation in 1997.

Mr Campbell, who formerly led the retail funds business at SWIP, owns 34 per cent of the company.

Co-founder and chairman Jim Fisher owns 38 per cent. Saracen Investment Funds ICVC, which contains the firm's two funds, reported a total return of £12.3m from investment activities during the 2013 calendar year, more than double the £5.4m it returned in 2012.